This week, the Georgetown University Student Association (GUSA) senate rejected a student referendum calling for Georgetown to fully divest from fossil fuels. The student representatives recognized that the referendum, sponsored by Georgetown University Fossil Free, lacked an effective and substantive strategy, citing the need to prioritize and address other important issues on campus over divestment.
Of course, this is not the first time that Georgetown Fossil Free has been criticized for focusing on grabbing headlines and “big wins” instead of affecting actual change. In fact, a recent Bloomberg article criticized Georgetown, Stanford and Oxford’s divestment announcements as “empty gestures” and highlighted the fact that these Universities’ did not have any real fossil fuel investments to begin with.
Criticism from financial experts, analysts, trustees and academics regarding divestment is nothing new, but the GUSA rejection of the initiative highlights just how vocal students, the real body of a university, have become in pointing out the moral hypocrisy and emptiness of divestment as a strategy to reduce carbon emissions. One Georgetown student, Deep Dheri (’16), recently wrote an op-ed deconstructing the common misunderstanding of how divestment works in financial markets. He states:
“…endowments selling all fossil fuel investments would only affect share prices and would have no impact on the profitability of energy operations because selling stock does not equate to removing funds from these companies.”
More importantly, this misunderstanding of basic economics can be potentially dangerous for endowments and universities. He goes on to state:
“Ultimately, GU Fossil Free’s efforts should be directed toward causes that lead to environmental change. Voting to divest, when doing so would have no meaningful — and potentially counterproductive — effects on the environment and negative consequences for the endowment’s ability to fund research and scholarships, would be a mistake.”
Another Georgetown student, Michael Khan, points out the inherent moral hypocrisy of divestment in his op-ed, “Consider the Dangers of Divestment.” Khan reasons that activists often cite the poor and disenfranchised as a reason to divest, when in fact access to fossil fuels has lifted millions of people out of poverty worldwide. He states:
“More than a billion people lack electricity in the world. Living in the poorest parts of Africa and Asia, these people are the ones who need fossil fuels the most. Over the last 30 years, China lifted 680 million people out of poverty by providing cheap and easy access to energy, powered overwhelmingly by coal. That’s how a nation with 90% extreme-poverty transformed itself into a world superpower.”
As Dheri and Khan both astutely point out, divestment has the potential to negatively impact endowments and the larger U.S. economy as a whole. Prof. Cornell of Caltech has even found that if full divestment were truly realized then Harvard, Yale, MIT, Columbia, and NYU could collectively lose more than $195 million for each and every year the portfolios were active. But it doesn’t take an economist to see the facts: Students across the nation are speaking out. Whether you call it an “empty gesture” or “pure window dressing,” divestment is an ineffective political tool and not much else.